SHIP results reveal home reversion increase

Ramesh Sharma

June 1, 2004

SHIP, the industry body which represents over 90 per cent of the equity release sector, reported that third quarter figures to 30 September are the highest to date in 2005 and show a significant increase in home reversion business written. SHIP believed this reflected the fact property price inflation is far lower now than in recent years which is making reversion products more attractive.

The total value of new business written was £293.6 million, 12.5 per cent ahead of the second quarter in 2005 (£260.9 million). Home reversion business increased significantly from £10.6 million in quarter two to £17.3 million in the latest figures.

Year-on-year, home reversions leapt from £9.6 million in quarter three 2004 – a rise of 80 per cent. Meanwhile, despite an increase on quarter two 2005 business from £250.3 million, year-on-year figures showed a considerable drop in the value of lifetime mortgage business written, from £328.8 million (quarter three 2004) to £276.3 million.

Jon King, chairman of SHIP, said: “After eight years of seemingly unstoppable growth, lifetime mortgage business has begun to slip back, despite it being a record quarter in 2005. However, home reversions have performed strongly this quarter.

“This reflects continued uncertainty in the property market and speculation that house price inflation is not likely to be as great in the future as it has been in the past. This may see increasing numbers of consumers turning to home reversions in preference to lifetime mortgages as the proportion of the house sold is fixed.”

Dean Mirfin, business director at Key Retirements Solutions, commented: “The market is levelling off and it is time for some consolidation. However, consumer demand is still good and there are still great opportunities for advisers moving into this sector.”

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